False Claims Act Filings Under Seal — a Closer Look
To many lawyers — even experienced federal court litigators — qui tam litigation under the federal False Claims Act is something mysterious and exotic. This is the result of several factors, but most of those factors relate in some way to the seal.
Federal False Claims Act cases must be filed under seal
Federal false claims act cases must be initially filed under seal with the Court, and the same thing is true for all state false claims actions.
In addition to the hurdles of filing a complaint under seal (as required by the FCA) there is also the fact that many cases stay under seal for quite a long time. Many lawyers dislike this, for understandable reasons. Many Judges also dislike this, because Judges are evaluated and scored based on how fast they move their cases. But, when the rubber meets the road — that is, when lawyers and Judges are shown clear-cut ways that they can move dockets along, including qui tam cases under seal — many members of the legal community balk at taking simple steps that can really move cases along.
So I read with interest Judge Anderson’s standing order on false claims act cases in the U.S. District Court for the District of South Carolina. Judge Anderson very reasonably entered this standing order to make it known that from that point forward — the order was entered in 2013 — extensions of the seal period would be given only for “good cause shown” as required by the FCA itself.
Judge Anderson does not define what will, in the future, constitute “good cause” for a seal extension. Indeed, it would be impossible to do that. Instead, he provides two examples of things that will not suffice to get an extension – settlement discussions and waiting for documents from a defendant.
I happen to agree with him on both points. First, if a case is indeed in settlement talks, there is no better way to move those talks along than to unseal the case and get litigation rolling. In fact, after unsealing, the government will have 120 days to serve the case, and that should be more than enough time to conclude settlement talks, especially if they are already underway.
As to the second example — waiting for documents from a defendant — government lawyers sometimes forget that it is they who control the momentum on civil investigative demands and subpoenas. Yes, you want to allow people enough to time to respond, but at the same time I have seen more defendants abuse the document production excuse than not.
Finally, to end on a not-unrelated note, take a look at this recent Judicial Conference report on qui tam cases which makes some rather unorthodox recommendations to help Judges manage their statistics, such as removing qui tam/FCA cases from Judicial Conference statistics until the cases come unsealed….
Not sure how I feel about that…but certainly I think Judge Anderson’s approach is much, much better.